Unit 2 Paper

Unit 2 Essay


The economy is based on an interdependent relationship between three entities. The three entities are: the government, businesses, and consumers. The role of the government is to regulate the market in which the businesses thrive. It can be evident by the messages in the present day media that the people believe government regulations damage businesses economically, myself included. I have been exposed to constant reports from sources of media that the slow recovery of our economy is due to the regulations placed by the government on the market. I initially assumed it was true until my research showed me otherwise. It shocked me that what we all believed was false. Government regulations did not hold much power over large firms at all. A deeper problem is that the lack of government control over the economy and corporations is creating massive issues because corporations are running freely on their own agenda and the economy is becoming less stable.

Corporations and businesses are always portraying the government as the villain in the market. There are always arguments that businesses should be allowed to do what they want and the government is just getting in the way. However, this is an uneducated assumption on the matter at hand. Government regulations do not actually have too much control on large corporations at all. Brian Shaffer wrote an article explaining how corporations deal with regulations. Shaffer writes about the methods and tactics used by corporations such as adaptation, lobbying, and forming political action committees to advance their corporate agenda (“Firm-Level Responses to Government: theoretical and research approaches 495). Adaptation is defined in the article as a corporation’s ability to effectively change its own structure and meet regulation requirements to continue its own operations (Shaffer “Firm-Level Responses to Government Regulations: theoretical and research approaches” 504). This means that corporation with enough resources can shrug off government policies and continue to hone on their own objective. They can also use their influence on legislation by lobbying and refining the policy for their own benefit. How can the government control the market if each legislation made just helps corporations. Corporations being able to continue their own private agendas freely could cause major problems, so the government should pull stricter regulations on them to keep them in check.

Economic regulations are rules and principles necessary to keep a market running in the right direction. People believe that setting up regulations will have a detrimental cost to our resources, however these assumptions are wrong. Regulations set up by the government actually brings more benefits that can outweigh the costs. The article “Government regulations: Do they help businesses” by Marc Davis talks about several agencies such as the Food and Drug Administration (FDA) & Securities and Exchange Commission create a safer, cleaner market for the public. If these agencies did not exist the market would be in a much worst shape than it is now. In a studies made on an article on EPI.org revealed from 2001-2010 that the annual benefits of regulations were around 136-651 billions of dollars while the annual costs was only around 44 billion (Irons and Shapiro “Regulations, Employment, and the economy”). Deregulation was actually what got us into this recent recession in the first place. The government thought that corporations practicing self-regulations could still create a stable market. They were wrong. The market grew and grew without any safety net and finally when it could grow no more it collapsed like a house of cards because its infrastructure that it was built on had no backing. History gives us evidence that the economy needs regulations and stricter regulations to help keep the market stable with safety nets to cover it incase of trouble.

The government cannot afford to neglect local businesses while trying to deal with big corporations. The economy is in shambles and many small businesses cannot operate because they have insufficient resources due to the regulations passed by the government. There are government agencies that aid start-up companies, but no one would even dare to attempt to start up a new business in today’s shaky market with tough regulations. A newspaper column on USA Today explains that the government is too busy trying to protect the environment that the regulations created to fulfill that role is choking small businesses. Somebody has to pay for the cost of these regulations and that somebody is small businesses (Donna Wiesner “Government Regulation Hinder Economic Growth). The solution to his problem can be found by allowing self-regulatory agencies to share the government’s burden in monitoring the market. The Role of Government in Corporate Governance is a book named after the same conference held to discuss these problems of who regulates and how. Self-regulatory agencies have some authority over corporations and closer proximity to them but lack complete power to punish transgressions. If the government provided supervision and enforcement to these agencies then a balanced regulatory system can be created. This allows the government to free its hands from over regulating and spend some time helping local businesses regain their strength so they can operate in the market.

Rules and laws are created to provide a balance in a community. They help in the prevention of transgressions that would harm individuals or the community. Regulations act in the same way except it protects the market and works on a larger scale. The market needs regulations to keep the economy safe and stable. The period of time when deregulation was a habit of the government cause large economic issues and allowed corporations to gain an advantage in the economy. The government must now pass new regulations to keep corporations in check and bring the economy to its feet again. However, the government must remember to tailor to the needs of smaller businesses and not to over regulate them because they do not own as much resources as corporations. If this can be done then the market can be safe and stable once more.



2 Essay

Leave a Reply